Chicago rideshare regulations approved

The City Council today approved a measure to regulate the fledgling rideshare industry in Chicago despite opposition from taxicab companies who believe Mayor Rahm Emanuel’s efforts don’t go far enough.

Aldermen voted 34-10 in favor of the new regulations after an effort failed to delay the measure until the General Assembly passes its own set of rideshare regulations.

“All I ask is that we hold on for a few months so we can mimic what they pass in Springfield,” said Ald. Anthony Beale, 9th, before his motion to delay failed by a vote of 36-9.

“This ordinance will hurt the hard-working men and women who are driving cabs every single day,” Beale said. “These men and women are the ambassadors of this great city. . . . We, I feel, are turning our backs on them with this particular ordinance.”

Rideshare companies “are making millions,” Beale added, before noting the hefty prices the city fetches for a single cab license, or medallion. Rideshare companies, Beale said, “are not paying $360,000 for a medallion. Those medallions will be useless if this ordinance passes. The people who are driving a cab every single day are struggling, just trying to make ends meet.”

Ald. Proco “Joe” Moreno, 1st, said the debate should be about the companies that buy the bulk of the medallions, not the individual cab drivers who work for them.

“This is not about the cab drivers,” Moreno said. “It’s about the medallion owners. Medallion owners have not been treating cab drivers fairly for decades.”

Once the ordinance goes into effect in 90 days, companies whose driver workforce averages more than 20 hours per person each week will face stronger oversight, including a requirement that all drivers obtain chauffeur's licenses.

But the ordinance leaves it to the ride-share companies like Uber X, Lyft and SideCar to police drivers in terms of how many work hours are logged.

The measure also gives the city authority to cap "surge pricing" when there is peak demand, such as during rush hours. Under surge-pricing conditions, fares can increase as much as tenfold.

Taxicabs are subject to set rates, based on distance traveled and the duration of trips. Rideshare companies will not be. But they will have to meet standards for insurance and inspections.

The Emanuel administration's argument for not making the ordinance any tougher was that the vast majority of ride-share drivers -- up to 75 percent -- work only part time. City officials estimated there are likely 100 to 150 full-time ride-share drivers.

The ride-share companies, which insist they are not in the traditional transportation business and therefore should not be regulated like taxis, contract with drivers who use their personal vehicles to provide commercial rides. Customers order rides using smartphone apps.

Companies with driver averages of no more than 20 hours per week, called "Class A," would be required to obtain city approval of their background check, driver training, vehicle inspection and random drug testing procedures. The license fee would be $10,000 per company.

Drivers for companies with driver averages of more than 20 hours a week would be required to get public chauffeur's licenses.

Under this "Class B" category, the city would conduct the background checks and drug tests and companies would be required to get an annual third-party, 21-point inspection of all vehicles.

In addition, the companies would need to obtain city approval for their driver training process. The license fee would be $25,000.

One of the proposal's more contentious components would require that ride-share companies obtain $1 million in commercial auto liability coverage, roughly three times what is required of taxis.

The industry and its critics disagree whether this type of coverage would protect ride-share customers or other drivers and pedestrians who are involved in an accident with ride-share drivers.